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Home My WebLink AboutR-1980-362 I RESOLUTION NO. 362 A RESOLUTION OF THE CITY OF DANIA, FLORIDA APPROVING THE CONVERSION OF THE PRESENT GENERAL EMPLOYEES PENSION PLAN TO AN "IM- MEDIATE PARTICIPATION GUARANTEE PLAN" ; AND PROVIDING THAT ALL RESOLUTIONS OR PARTS OF RESOLUTIONS IN CONFLICT HEREWITH BE REPEALED TO THE EXTENT OF SUCH CONFLICT; AND PROVID- ING FOR AN EFFECTIVE DATE. BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF DANIA, FLORIDA: Section 1. That the conversion of the present General Employees Pension Plan to an "Immediate Participation Guarantee Plan" as outlined in the presentation made by the Travelers , Group Department, Hartford, Connecticut, which said outline , consisting of nine (9) paaes, is attached hereto an made a part hereof as "Exhibit A" , be and the same is hereby approved. Section 2 . That all resolutions or parts of resolutions in conflict herewith be and the same are hereby reppealed to the extent of such conflict. Section 3 . That this resolution shall be in force and take effect immediately upon its passage and adoption. PASSED and ADOPTED on this 2Cth day of Aupu.bt 1980. May r - Commissioner J Attest: / ;Zz- City Clerk - Auditor Approved l for Form and CCorre�ctiveness: By:7J�fI � o r"ci`�'i(a 4 Frank C. Adler, City Attorney J y 1 IPG BOOK VALUE 'TRANSFER i Reduction from Case Average Earnings Rate for Number of Annual Installments Elected Market Value Number of Annual Installments Loss _3 L 7 10 0 - .24$0 1.95% 1.50% 1.15% .90y6 .25 - •49 2.45 1.70 1.55 1.20 .50 - .74 2.70 1.85 1.65 1.25 .75 - .99 2.95 1.95 1.70 1.35 1.00 - 1.99 3.10 2.10 1.75 1.40 2.00 - 2.99 3.25 2.20 1.80 1.45 3.00 - 3.99 3.35 2.30 1.85 1.50 4.00 - 4.99 3.45 2.45 1.95 1.55 _ 5.00 - 6.99 3.75 2.70 2.10 1.70 7.00 - 9.99 4.35 3.10 2.50 2.00 10.001/0 or more - - 3.60 3.10 �w As an example, if the contract earnings rate were 9.5316 and the transfer would generate a market value loss of .25%, 99.75% of the fund would be transferred immediately (or 10 monthly installments, if necessary, or as elected by the contractholder at discontinuance, 10077/0 of the book value of the fund would be transferred in 3, 5, .7 or 10 equal annual installments. The number of installments would also be elected by the contractholder at discontinuance. Interest would be credited at 7.05% if 3 installments are selected, at 7.8% if 5 installments areselected ^* at 7.95% if 7 installments are selected and at 8.3% if 10 installments ' are selected. Financials Upon request, The Travelers will provide a copy of the most recent Form 10-K of the Travelers Corporation, as filed with the Securities and Exchange Commission, together with the supplemental Financial Statement. THE TRAVELERS GROUP DEPARTilfE.NT Hartford, Connecticut 8/12/80 GI-41509-A REV. 2-72 PRINTED IN VS.A. f I J i 1 CITY OF DANIA GENERAL EMPLOYEES RETIMMM PLAN I GROUP AMITY CONTRACT GR 1440 This presentation is to describe The Travelers Immediate Participation Guaranteed (IPG) arrangement for investment of pension plan assets. This will also confirm that The Travelers is agreeable to converting the City's existing Deposit Administration contract (DA) to the IPG alternative. This offer will expire on October 11 1980. The IPG contract provides an effective and flexible funding vehicle for pension fund investment. The Travelers offers its full facilities and expertise in all major areas of investment markets. IPG contracts em— phasize flexibility and should adapt easily to the needs and objectives of your plan. To facilitate conversion from the DA contract to an IPG we are prepared to offer the following: — The negative margin has been adjusted down to $41,758. This ,. would be a direct charge to the fund upon conversion. — The Travelers will agree to waive our standard $1,500 conversion charge for the change to IPG. — IPG conversion can be implemented retroactive to IA/80. — We have deferred annuity purchases for retirees Dayton Mess and Woodward Hampton. Current benefit payments will be issued directly from the fund until 10A/80. — Upon conversion to IPG, funds deposited under the DA contract will be credited with "new money" interest rates for the respective years deposits were made. — Additional investment alternatives will be provided under the IPG. — Flexible discontinuance and fund transfer provisions will apply for new deposits under the IPG. Pages 2 through 4 provide an over view of some basic features of your existing DA contrast and an IPG contract. TFIE I I I TRAVELERS GROUP DEPARTMENT Hartford, Conneaicuc -. -fI-z1S0R.-4 .REV, 7-77..P91NTFP IN U.S.&. ..n_./,..../n� F71 ' , 2. DEPOSIT ADMINISTRATION CONTRACT Guaranteed Interest Rates Existing Fund: $475,429.36 on December 31, 1979 7h to Wo interest rate depending upon year of deposit Future Deposits: 10.5% on deposits after April 1, 1980 Guaranteed Principle Guaranteed',Benefits Guaranteed Annuity Purchase Rates Travelers guarantees retirement benefits and annunities are pur- chased for retired employees. Guaranteed Contract Charges $ 1,800 less 2yo annual deposits in excess of $20,000 I $ 500 minimum annual charge 3% of disbursements paid from fund (Example: an employee withdrawal of $1,000 has an expense of $30). Equity Investment Funds Are Available THY:n TRAVELERS GROUP DEPARTMENT Hartford, Connecticut L 3. CITY OF DANIA - GEIdEM EMPLOYEES DEPOSIT ADMINISTRATION CONTRACT GUARANTEED INVESTMENT COMPARTMENTS As of December 31, 1979 1 Estimated Balance Interest Guarantee $ 20,439.38 7 Y $1031,771.53 8 % ,r . $198,403.62 8.50,E C $ 61,403.02 8.75% $ 91,411.81 9.0 Yo Ctaxxent Deposits 10.5 THE TRAVELERS GROUP DEPARTMENT Hartford, Connecticut J , 8/12/80 GI-41509-A REV. 2-72 PRINTED IN D9.A. _ 471 i ' I i f I.P.G. CT ,I Interest Rates (General Account) Funds are credited with actual new money rate earned in year of deposit. Principal is guaranteed in the general account. Equity Funds Investment flexibilty is offered through various pooled accounts. Expenses -.Contract Charges Expense would be deducted as incurred. i� Refer to exhibit on following page. Annunities - I.P.G. Retirement Annunities are reserved but retained in fluid with interest or mortality gains immediately credited to the fund. Travelers guarantees retirement annuittes. Upon contract discontinuance, annuities would be purchased with these funds reserved for retired employees. xA,.t THE DJ TRAVEI.F:RS • GROUP DEPARTMENT Hartford, Connecticut 8/12/80 G101509-A REV. 2.72 PRINT EO IN U-S.A. J !�' 5 CITY OF DANIA - GENERAL EMPLOYEES I.P.G. ESTIMATED ADMINISTRATIVE FEES 1. Conversion Charge $1,500 upon change to IPG 2. Administrative & Investment Fee .50$6 0£ the first $2,000,000 total fund accumulation. .25% of the next $8,000,000 3. Extra Account Charge $300 4• Premium Taxes Charged as incurred 5. Commissions Charged as incurred C 6. Drafting of Plan $600 7. Drafting of Plan Amendment $150 8. Drafting of Employee Booklet (SPD) $450 9• Revision of Booklet (SPD) $225 10. Printing of Booklets (SPD) 25 Pages or less $35 plus $15 per 100 copies Over 25 Pages $60 plus $20 per 100 copies 11. Actuarial Evaluation $4,200 12. Monthly Benefit Payments $1.25 per check issued Above items 5 through 11 are optional services which may be elected at the discretion of the Trustees. THE I TRAVELERS GROUP DEPARTAfENT Hartford, Connecticut f 8/12/80 I y J 6 i CITY OF DANIA - GENERAL EMPLOYEES CONVERSION TO IPG i If the alternate contract is selected the conversion would entail the following administrative and financial considerations: I - As of 12/31/79 the estimated fund balance under the DA contract was $475,429. This amount would be segregated under the IPG contract. We would begin crediting new money rates for each respective year of investment. An exhibit reflecting the history of new money rates follows on the next page. - All interest earnings on the accumulated fund are rolled forward into the current year investment compartment and thereby will attract current new money rates. - Under the DA contract The Travelers has purchased annuities for all retired employees (excluding Hampton and Kiess). The Travelers continues to guarantee these benefits. - The Travelers could realize some experience gains on these annuities purchased for prior employees. In such case, these gains would result in a credit to the funds held under an IPG. - Funds deposited under the old DA contract represent investment which are constantlymaturing.ing. As these investments mature, the funds will be reinvested in current new-money compartments. - Fund disbursements for benefits or employee terminations are made on a first in - first out basis. Thus, payments will reduce the fund balance in the oldest investment compartment. - The balance transferred from the DA contract will be subject to transfer and discontinuance provisions of the DA contract. - New Deposits under the IPG can immediately begin earning the "'new money rate" on fixed income deposits. This is the actual invest- ment return determined for the General Account of Travelers. The - Travelers new money rate was 9.3% for 1978 and 10.03% in 1979• - The fixed income approach is the standard application for most fund3invested under the IPG and is mandatory for employee con- tributions. However, the contract will provide for expanded i investment alternatives for employer deposits. Refer to page #8. - New deposits under IPG will be subject to more liberal and flexible discontinuance provisions. Refer to the exhibit on page 9. The proposed IPG conversion is contingent upon The Travelers receiving the City's and The Trustee's formal notice to proceed with the IPG prior to 10/1/80. THE I TRAVELERS • GROUP DEPARTMENT • Hartford, Connecticut GI-41509-A REV. 2-72 PRINTED IN U.S.A. 8/12/80 i l i I HISTORY OF NEW MONEY RATES I� 1969 - 7.23% 1970 - 7.65% 1971 - 8A6% 1972 - 8.61% 1973 - 8.1316 1974 - 8.5W 1975 - 9.251% _.. 1976 - 9.99% C Y� 1977 - 9.OL 6 1978 - 9.36% 1979 - 10.03% i THE I 1 TRAVELERS GROUP DEPARTNIENT' Hartford, Connecticut GI-41509—A REV. 2.72 GR 4TC0 ire U.S.A. J IPG INVESTMENT OPTIONS IMMEDIATE PARTICIPATION GUARANTM CONTRACT The Travelers Immediate Participation Guarantee Contract provides an / effective and extremely flexible funding vehicle for pension programs. Through this contract, The Travelers offers its full investment facili- ties and expertise encompassing all major areas of the investment mar- kets. Our contract emphasizes flexibility and, as such, can be easily adapted to the needs and objectives of your plan. This contract is structured so that the trustees will continue to exercise certain controls as to the types of investment vehicles utilized for plan assets. The investment facilities available to the plan trustees are as follows: General Account - This represents The Travelers al fixed investment account comprised offixed income yielding investments such as bonds, mortgages and direct place- ment loans. The Travelers "new money" interest rates are determined by this account. Equity Separate a - The Travelers has several pooled Accounts Separate Accounts available comprised Primarily of common stock holdings. Specialized Investment - On the basis of our experience in all Accounts major areas of the investment market, The Travelers has developed alterna- tive investment accounts. A short-term debit account (Separate Account "S"), our real estate account (Separate Account our public bond account (Separate account "P"), or our private placement ` account (Separate Account "D"), may also be made available,subject to certain requirements. The plan trustees may elect to utilize these accounts in a mix appro- priate to the plan needs and market conditions. TtiEI J TRAVELERS • GROUP DEPARTMENT • Hartford, Connecticut GI.41509-A REV. 2-72 PRINTED IN V.S.A. 8/12/60 I